“The 2008 financial crisis was an “avoidable” disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a Congressional inquiry.”

The government commission that investigated the financial crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors, and risky bets on securities backed by the loans.

“The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done,” the panel wrote in the report’s conclusions. “If we accept this notion, it will happen again.”

And then there is this:

“The report itself finds fault with two Fed chairmen: Alan Greenspan, a skeptic of regulation who led the central bank as the housing bubble expanded, and his successor, Ben S. Bernanke . . . It criticizes Mr. Greenspan for advocating financial deregulation and cites a “pivotal failure to stem the flow of toxic mortgages” under his leadership as “the prime example” of government negligence.

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

A question I have raised after everyone calls for criminal prosecution how many folks got convicted? Charles Mitchell and Samuel Insull were indicted were aquitted, with Insull being hounded to death, and Mitchel making a comeback. Richard Whitney was convicted but of embezzlement.
Consider that prosecutors don’t like to loose cases and with the loss of the Bear hedge fund cases will require that the case be air tight. Note that if you have advisors that say its ok then its much harder to charge fraud. These cases are very complex, perhaps to complex to give to a jury of 12 ordinary folk, so that civil action which does not involve a jury may work better. In particular I believe a civil action can bar working in a licensed position in the securities industry for life.

Lyle,
I have heard Catherine Austin Fitts on talk radio describing the corruption she encountered while she was Asst. Secretary at HUD under Bush I. She reported it and got nowhere fast.
I have heard her say that in the ongoing MBS story that the same mortgages were bundled multiple times into different securities. I believe she said it was as many as ten times for the same mortgage.
A thorough investigation by the FBI would create an airtight RICO case most likely.
But those guys do what they are told, so they are sent on various wild goose chases for low level Mafia thugs, and entraping low IQ “Terrorists” with fake explosive devices and pre packaged “plots”.
All this while the MBS and TARP fraud has bankrupted the nation.
The Madoff Ponzi scheme was outed in written detail to the SEC, nothing happened.
All of the big time investment bank fraud was accomplished with the approval of the federal government.
If they have the resources to hire 45,000 drones at airports to keep bottles of water and nail clippers off aircraft, then all the theft in the housing debacle could have been stopped cold in a minute, unless they wanted it to happen.
MBS instruments were illegal before all the finacial “reforms” were passed by the government, and 250k/500k tax free incentives for housing were made law, along with ZIRP, NINJA loans, and “there is no housing bubble” talk from the Fed.
That is way too many ducks in a row to be accidental or chance.
It was planned by the investment banks, and aided and abetted by the Federal government.
The Federal government will bluster, hem, and haw until the statute of limitations runs out on the crimes.
They don’t need an explanation as to what went wrong from a “Commission”, it all went according to plan.

But the point I make in looking back at the 30s is what is happening is the way things really work not the idealized version taught in High School Civics. It has always been the case that there are two sets of rules, recall the Southern Pacific running folks off land when it suited Huntington. Or the various land schemes in the early part of the 19th century. It has always been the case that if you are a friend of the King, you can get off with screwing the little guy. It will always be that way. All history suggests that is possible is to toss one elite out and get another, see France and Russia. But today at least it takes a little creativity to pull it off 150 years ago you just went to the capital or state house and dispensed the money. The only concern then was folks that took payoffs from both sides.

We’ve got rioting all over the world due to high food prices, lack of jobs and corruption in government.
Time for the pitchfork crowd to emerge? It won’t be pretty or fun, but if we DON’T get off our asses and do something about the way this is being (mis)handled, it will not end well either.

Deregulation is the removal and/or simplification of government rules and regulations that constrain the operation of market forces. Deregulation does not mean elimination of laws against fraud, but eliminating and/or reducing government control of how business is done, thereby moving toward a more laissez-faire, free market.

Deregulation can work but you have to have a system of check and balances to support it and laws to uphold a framework of ethical decision making.

As michael-D said “Let’s see serious recommendations for criminal prosecutions. Let’s see the lists they send to Attorney General Eric Holder. Let’s see some passports being seized. Let’s see the worthless SEC go after the rating agency’s.

Otherwise, same rip-off, different day.”

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About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

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